Mobile fuelling eCommerce in India

Increasing smartphone penetration leading to surge in number of internet users has a lot to say in the restructuring retail scenario.

Gargi Bhardwaj

Given the investor-friendly environment, burgeoning digitization and de-polarization of online and offline formats, the retail industry of India is headed for a major structural transformation, or ‘disruption’ as the stalwarts pronounce it. And the increase in smartphone penetration leading to surge in number of internet users has a lot to say in this restructuring retail scenario.

Being driven by a young demographic profile, increasing internet penetration and relative better economic performance, India's eCommerce revenue is expected to jump from $30 billion in 2016 to $120 billion in 2020, growing at an annual rate of 51 per cent, the highest in the world, according to a joint ASSOCHAM-Forrester study paper.

In contrast to the above data, the mobile data usage has more than doubled in three years on account of more and more people accessing the internet. From 5.87 lakh TB in 2013-14, the mobile data usage increased to 13.84 lakh TB in 2015-16 (up to Feb’16).

Moreover, according to Union Minister for Telecommunications and Information Technology Ravi Shankar Prasad, “India's Internet user base, which currently stands at about 40 crore, is expected to touch 50 crore by the end of this year.”

Moreover, what interests the retail industry here is the fact that Indians are using Internet more for shopping than for social media. As per a survey by a survey by American express and Nielsen, 98 per cent of the connected population is using the Internet to shop, while 96 per cent use it to browse social media.

India and the world

Indian eCommerce base is growing at a rate of 51 per cent against China at 18 per cent, Japan at 11 paer cent and South Korea at 10per cent. With annual additions of 25 million internet users, India is ahead of countries within the BRICS nations with its Internet user base of 400 million in 2016, whereas Brazil has 210 million internet users and Russia has 130 million of internet user.

Interestingly, about 75 per cent of online users are in the age group of 15-34 years since India is one of the youngest demography globally. "This is expected to be a continuing trend in coming years, given the age distribution in India", said D S Rawat, ASSOCHAM Secretary General.

Retail penetration

Penetration in retail has surged to 65 million unique visitors a month, thus leading to an annual growth of 55 per cent. While the growth has been recorded across all categories with impressive conversion rates, apparel has been the fastest growing subcategory in retail by reaching out to 24 per cent online users.

In India roughly 60-65 per cent of the total eCommerce sales are being generated by mobile devices and tablets. Shopping online through smart phones is proving to be a game changer, and industry leaders believe that m-commerce could contribute up to 70 per cent of their e-commerce revenues.

Increasing internet and mobile penetration, growing acceptability of online payments and favourable demographics has provided the eCommerce sector in India the unique opportunity to companies connect with their customers.